Good credit score entails a key to financial freedom. With scores above 750 you not only get access to easy loans and credit cards in the present, but you also become a preferred customer of bank for several add on credit deals and discounts in future. For, a good score suggests that you not only use the banks’ products but also pay back on time.
Thus anyone who wants to enjoy credit facilities should always pay attention to enhance credit score. Although managing credit score is not a rocket science, but it certainly requires a lot of financial discipline and planning to keep the score in upward direction. There is no defined timeline to work on your credit score. Each month, week and day, you need to be vigilant of your credit accounts and payments so as to not miss any dues ever.
If you plan to apply for a home loan in future, or an auto loan to buy a car, or for that matter, apply for a credit card or use any of the bank’s credit offering, you certainly should start working to improve the score today. Working on score months before the loan application is just the right time to enhance the rating. With good score in your kitty you would substantially save on interest rates and have shorter EMIs.
So let’s find out how to get a good credit score always? If you have a low score, then how to improve CIBIL rating? And what are the factors that affect your score adversely? Finding out answers to all these FAQs, would help you understand score calculations even better.
Step By Step Process to Enhance Credit Score
Study your credit report and access the practical situation.
It is important to study your CIBIL Credit Information Report by heart before you work on different ways to increase credit score. Knowing your report practically helps you know how much homework you need to do before applying for the next loan or credit card. When you read your report look for following:
Any kind of factual errors in your account details, personal details or payment history. If you come across a dispute, probably a correction would be enough to raise the score.
Fraudulent credit query or unidentified entry in your account. This is a first check for identity theft. Identify thefts can be financially disruptive and bleed your credit score.
Reasons for low score. These could be as trivial as late payments or skipped payment reports.
Gap between the desired score and the actual score. This would help you know how much work you need to put in, to manage the score. Knowing the width of gap you can even decide to use a professional help to manage the score.
Make a strategy to improve cibil score.
If you want to maintain a good score, pay attention to following points always.
Make timely payments. Avoid late payments on all costs. As, clear credit history is one of the most important factors to boost the score.
In order to ensure that you never miss the EMIs or bills, you can automate the payments via a bank account on a fixed date every month. All you need to ensure is enough surplus in the account to make the next month’s payment.
In case you have too many debts to pay back, you should make a budget and save as much as possible to avoid late payment. This planning will help you get enough credit for future.
Never appear credit hungry when you apply for loan. Too many credit applications too soon, damage the score and make you look in dire need of funds.
Try to maintain a right mix of secured and unsecured loans and credit facilities. Too many unsecured loans bleak your credit worthiness too. In fact applying for a secured credit card is one of the quickest methods to improve the score.
Keep track of your co-accounts as guarantor and/or joint loan applicant. If any of your joint account holders default your score would be jolted too.
Never use more than 30-40 % of credit limit. Always try to maintain a decent credit utilization ratio.
Always clear monthly credit bills on time. Never let the card balance transfer from one month to another.
Last but never the least, you need to use all these steps month on month. Keep track of your credit report twice or thrice a year and have a strict check on any of the issues that hamper your score.